Even as Indian GDP has dropped from ~8.4% in 2011 to 4.4% in Jun-13, bank loan growth continues to be relatively high at 17%. Factoring in the WPI moderation, the macro slowdown is even starker with growth down 8pp from last year’s level. While the recent acceleration can partly be attributed to a shift away from money markets (CPs), but even adjusted for that loan growth is running at 15%. Credit multiplier to real GDP has jumped to 4x (last 10-yr average 2.9x) and for the past six months, incremental loans to GDP ratio is running at 100%.
■ *Corporate still the driver, even as correlation to GFCF has broken down. *In our Jan-13 report, "Corporate loan to slow to single digits", we had forecast a drop in loan growth on the back of the sharp investment slowdown as corporate capex historically has been a key driver for loans and loan growth has had strong correlation with GFCF. In recent months, even as GFCF has dropped to 4% YoY and IIP growth averaged at -1%, corporate loan growth has still been at 15%. We still expect corporate loan growth to fall as investments slow further, with recent RBI data highlighting that project loan approvals are down to ~Rs1.9 tn from Rs3.7 tn in FY11. ■ *Growth still high in problem segments. *An added concern is that a large share of incremental growth continues to emanate from high stress segments. Infra loans have contributed to 45% of YTD (Apr-July) loan growth and media reports highlight re-financing for over-leveraged companies. We therefore continue to remain cautious on the corporate lenders as we expect both asset quality and growth to come under pressure. We are cautious on SBI, PNB, BOI, Union, ICICI & Yes Bank. -- -- NIFTYVIEWS.COM NOW A FREE OPEN SOURCE WEBSITE. http://www.niftyviews.com/ Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture.The administrator of www.Niftyviews.com just provide a platform for the authors to express their opinion and take no gurantee for the genuineness of the same." --- You received this message because you are subscribed to the Google Groups "TEAM STOCKRESEARCHERS" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
